Addition of Dongtan and Giheung to Real Estate Regulation Zones: Impact of Gangnam's Record High Prices?
Market ripples are emerging as the government implements targeted regulations, designating Dongtan and Giheung as land transaction permission zones to block the aftermath of overheating housing prices in Gangnam.
The government has played its targeted regulation card by additionally designating the Dongtan new town and Giheung areas as land transaction permission zones. As apartment prices in the three Gangnam districts (Gangnam, Seocho, and Songpa) show signs of overheating by breaking previous all-time highs, this is a strong measure aimed at blocking the upward momentum from spreading to the southern metropolitan area.
Background of Gangnam's Record Highs and Dongtan-Giheung Regulation
Coupled with the recent surge in jeonse (deposit-based lease) prices for Seoul apartments, instances of sales prices renewing previous peaks are emerging rapidly, primarily in the three Gangnam districts. Feeling anxious, purchasing power has spread to the metropolitan area, with speculative demand concentrating specifically in Dongtan and Giheung—regions benefiting from the favorable news of the GTX opening and expectations for a semiconductor cluster. To prevent abnormal price spikes and fundamentally block gap investments, the government took the bold step of additionally designating these areas as land transaction permission zones.
Spread of Local Backlash and Market Impact Analysis
Immediately following the announcement of the regulation, strong backlash has erupted among local residents. The primary concern is that a transaction drought will become a reality as transactions for purposes other than actual residence are essentially banned. Within a land transaction permission zone, a buyer is obligated to reside in the property for 2 years, making gap investments (buying with a jeonse tenant) impossible. Real estate experts warn that while a short-term contraction in transactions in Dongtan and Giheung is inevitable, a 'balloon effect' may occur where speculative demand shifts to nearby unregulated areas such as Suwon or Osan.
💡 Core Q&A (FAQ)
Q1. What is restricted when designated as a land transaction permission zone?
When trading housing over a certain size within the designated zone, prior permission from the head of the local government must be obtained. The biggest restriction is that the buyer must mandatorily reside there for 2 years from the date of acquisition. In other words, purchasing for investment purposes or buying a house with a tenant is fundamentally prohibited.
Q2. Will housing prices in Dongtan and Giheung drop due to this measure?
In the short term, it is highly probable that the steep upward trend in asking prices will break as purchasing sentiment shrinks and transaction volume plummets. However, since major development news driving regional fundamentals—such as the construction of the semiconductor mega cluster—remains valid, the dominant analysis is that prices will enter a long-term plateau rather than a sharp plunge.
Q3. Do people who own existing homes also need permission for lease contracts?
No. The leasing act itself, where an existing homeowner enters into a new lease contract with a tenant or renews a contract, is not subject to permission. The permission system only applies to 'sales transactions' where ownership is transferred.